Bringing Ellison's storage baby to market

Pillar is garnering plenty of attention thanks to Ellison, the company's sole investor to the tune of $US150 million via his Tako Ventures firm. Pillar already employs 325 staff, 70 percent of them in research and development, and is expanding aggressively. It is also aggressively pricing its products, which it claims are easy to install, flexible and will simplify storage management.

Mike Workman, Pillar's ebullient president and chief executive officer, came to the company with 20 years experience in the storage business, including stints with IBM and Conner Peripherals. He told China Martens how he ended up at Pillar and about working with Ellison. Following is an edited transcript of that conversation.

Q: How did you come to join Pillar?

Workman: It's a weird model. I didn't look for them. They looked for me. Steve Fink (Pillar's chairman and treasurer, also CEO of Lawrence Investments, the parent company of Tako Ventures) and Larry Ellison had been investors in Digital Appliance for nine years. They were wanting to put more money in and have a serious storage company. They started looking for a CEO who knew storage and in 2001 they called me. We set up a call. Larry's extremely bright with an awesome sense of humour. Then I flew over to Israel where Digital Appliance was based. I said I wasn't interested. It would cost $100 million. It was a do-over, a mulligan. They said, 'OK, let's start' [from scratch]. They decided to give me $100 million.

Q: Hasn't it taken you a long time from 2001 until now to come out with products?

Workman: It did take us a long time. But we're offering a full spectrum [with Axiom]. Many startups attack a niche, but we want [the lot]. Our product has 2.5 million lines of code and our hardware is purpose-built for storage. We have more than 140 systems installed inside Pillar. We listened to customers' complaints about storage. A very common complaint was why does storage cost so much? Everything has moved down in the market -- PCs, mid-range servers, etcetera. Storage didn't do that. Network Appliance is a great company, but it's had same architecture for quite some time. EMC's architecture is quite a bit older than that, it dates back to Clariion.

We like to joke about temporarily unburdening ourselves from the shackles of past success. We don't have any. We looked at what we'd do if we had a clean sheet of paper, how we'd address customer pain points. Those are cost and complexity. No matter what anyone does, storage just keeps getting harder to manage. Look back at 2001, an IT data centre manager would say, 'If you bring me one more thing, I'll kill myself, I don't need any more things'. So we looked at how to solve a wider variety of problems on one platform. We don't give customers more to learn, we give them less to learn, one platform and one maintenance contract.

Q: Is the current funding of $150 million for Pillar enough?

Workman: We probably will need a little bit more. We have quite a sales ramp. We will have a storage company in five years. It could be before, we don't know when sales will ramp.

Q: How are you going about establishing sales channels?

Workman: We've fundamentally been scaling up the sales team for a quarter. We've gone from seven people to 45 and growing. They're all North America-based and in high storage-centric areas like New York and New Jersey, on both coasts and in the Midwest. Unlike most small companies, we've really emphasized customer support. Customers told us not to skimp on support, because small companies often do that. We have a direct support team which is 15 percent of our budget. Ultimately, we'll have a global reach. We've added IBM Global Services as a partner to service logistics and failback.

Q: Who are you aiming your sales efforts at?

Workman: The Fortune 20,000 at the moment. We've discovered that every company we go to can use Pillar. The sweet spot will be companies with $100 million of revenue and up, but there are some smaller firms -- one of our first customers is a sub-$10 million company.

Globally, we're expanding into Europe as we speak. I don't expect we'll have a significant sales force there until the end of the year. We'll go into Asia some time in the first half of 2006. We'll have direct sales and a reseller channel. We've signed up three resellers so far. Ultimately, our sales model will be 50-50 direct-channel or 60-40. Everyone has problems with channel conflict. We're trying very hard to make sure we're upfront with our resellers.

Q: The perceived wisdom is that Ellison's previous investments in the likes of nCube and Network Computer Inc (NCI) haven't paid off. What's your opinion?

Workman: That's not really true. nCube did work out [the company was acquired by C-COR]. He invested in it for more than 15 years. He's not mercurial. Network Computer is where Digital Appliance came from. It was part of the software for NCI, which morphed into a storage company.

There's a positive and a negative side [about having Ellison as sole investor.] On the positive side, Pillar is extremely fortunate not to be developing in the typical VC model. On the negative side, we're funded by one person. As any CEO of any company, Larry has proponents and people who'd like to throw a rock at him. At the end of the day, this is not about Larry, it's about Pillar. We do occasionally get some negative comments if we're pitching to a competitor of Oracle's.

We're certified on Oracle 9 and we're working on other certifications. We hope Oracle will be a customer. We're not allowed to say anything today. Household-name customers are there, but we can't mention them yet.

Q: Where did the name Pillar come from?

Workman: We went through names at the company, it was really hard. We did a customer survey with 60 customers. Pillar sounded strong and not goofy. Customers saw a pillar as holding other things up in a good way. I talked to Larry about it. We were in hysterics on the phone about how hard it is to agree on a name for a venture. You can't be silly with the name of a storage company. You need something safe and secure and professional. Axiom [Pillar's product name] was my suggestion, a self-evident truth, storage going to be done this way. You won't have a platform for every problem, but a platform that solves multiple problems.

Q: With the consolidation in the industry and all the startups, is this a good time to enter the storage market?

Workman: It's an outstanding time. If you look back at 2001, everything was so dreary, the economies were definitely not hot, IT budgets were shrinking, spending on capital equipment was down. When people were getting impatient in 2002, 2003, I'd tell them now is not the time. 2005 certainly is the time. The economy is pretty good, people are spending more on IT.

Q: What about going public?

Workman: That's very interesting to our employees. All of our employees have a piece of equity. It's not as important for investors. Larry wants to own a storage company. The rest of us are looking forward to a day when we can be publicly traded. I don't know when that may be. Our success will determine that.